Sub-prime Meltdown Hits Thailand With Force

[Martin]

"I can't imagine that anybody here on TV wishes the world to end up into a recession as it would hurt us all, Thailand included."

Now, now. Let's steady down a bit. There is no danger of that.

A recession is probably inevitable, and it is probably better to get on with it sooner, rather than later when it would be all the greater.

But the world won't 'end up' in it. The world will work its way through it.

It may be messy and painful to some countries. But it can be dealt with relatively tidily and sensibly by Thailand.

I have just finished an MA thesis that examined a scenario of Thailand 30 years from now, after all this has been worked through. At first, I thought that the scenario would prove impossibly optimistic; but, in the event, I came across no evidence of anything that made it impossible, and quite a bit that supported it.

Of course, it is only a scenario. All sorts of happenings (some chance, some cock-up, some conspiracy) can cause the future to develop very differently from that scenario.

The first danger, as I see it, is that recession may breed depression. That would delay recovery. But it wouldn't prevent it. The next generation (which now includes my own greatgrandsons) would buckle down to sorting things, as my generation did from 1945 to 1965.

But there is no real reason for depression to set in. There have been exuberant bubbles before that burst when a touch of fear set in and whose aftermath has been sorted. Greenspan recalled some of them yesterday.

This will all work through. We will live in interesting times. And it could well be that the long-term result of the sub-prime meltdown hitting Thailand will be an improvement of things for Thailand.

[LaoPo]

"I can't imagine that anybody here on TV wishes the world to end up into a recession as it would hurt us all, Thailand included."

Now, now. Let's steady down a bit. There is no danger of that.

A recession is probably inevitable, and it is probably better to get on with it sooner, rather than later when it would be all the greater.

But the world won't 'end up' in it. The world will work its way through it.

It may be messy and painful to some countries. But it can be dealt with relatively tidily and sensibly by Thailand.

I have just finished an MA thesis that examined a scenario of Thailand 30 years from now, after all this has been worked through. At first, I thought that the scenario would prove impossibly optimistic; but, in the event, I came across no evidence of anything that made it impossible, and quite a bit that supported it.

Of course, it is only a scenario. All sorts of happenings (some chance, some cock-up, some conspiracy) can cause the future to develop very differently from that scenario.

The first danger, as I see it, is that recession may breed depression. That would delay recovery. But it wouldn't prevent it. The next generation (which now includes my own greatgrandsons) would buckle down to sorting things, as my generation did from 1945 to 1965.

But there is no real reason for depression to set in. There have been exuberant bubbles before that burst when a touch of fear set in and whose aftermath has been sorted. Greenspan recalled some of them yesterday.

This will all work through. We will live in interesting times. And it could well be that the long-term result of the sub-prime meltdown hitting Thailand will be an improvement of things for Thailand.

Interesting post Martin, thanks.

Of course the world won't 'end up in it' but that's not what I meant. I meant 'end up' in a recession and I don't wish for it as well. I didn't even mention 'depression' like in the '20's and '30's of last century.

The world economy will always revive & survive, I agree.

Interesting to learn from you what scenario there was in your MA thesis: "Thailand 30 years from now". Please tell us more.

I am especially interested how Thailand could improve after the 'results' of the subprime crisis, whether they turn out to be bad or not.

And, as for the 'sorting things out' of the new generations: of course they would be able to do so, but it will be different, and -for them- more difficult as well, as those younger generations never experienced real bad times...

Between 1945-1965 telex just started, telegrams prevailed, no faxes, still no wide-spread telephone connections, no mobile/cell phones, no internet, few people owned cars, nobody flew up and down to LOS for a holiday, and I could go on.

The '45-'65 generation (and previous ones) were satisfied with less, not more, because it didn't exist and if you don't know, you don't miss it, right ?

But, we'll see, and let's hope that after the just released OBL tape nothing serious will happen. Buddha/God forbid, because if it does.....

Let's keep smiling

LaoPo

[Martin]

"Interesting to learn from you what scenario there was in your MA thesis: "Thailand 30 years from now". Please tell us more."

It is too long to post on here (the Mods would have a hissy fit), but if you will send me a PM with an e-mail address, I will gladly send you the document as an attachment to an e-mail.

[LaoPo]

"Interesting to learn from you what scenario there was in your MA thesis: "Thailand 30 years from now". Please tell us more."

It is too long to post on here (the Mods would have a hissy fit), but if you will send me a PM with an e-mail address, I will gladly send you the document as an attachment to an e-mail.

I did already, thank you.

Best regards,

LaoPo

[Carmine6]

for the uninformed Countrywide (aka Countryslide or Countryfried) is the BIGGEST mortgage lender in its space in the US and will soon file for bankruptcy, and with the net loss of jobs reported today (loss of US 4000 as opposed to expections of 110,000 created, first net job loss since 2003), export dependent economies like Thailand with strong currencies will only feel more pain.....but hey PALM, have a lollipop with a helping of denial on me..................

Mortgage Lender Countrywide to Cut As Many As 12,000 Jobs

http://biz.yahoo.com/ap/070907/countrywide..._cuts.html?.v=4

Bingobongo, whether you're right or not, maybe it's a bit more chique if you bring news a little more to the truth and less sensational, since you don't know if Countrywide is going to file for bankruptcy or not, unless you have more inside information than we do.

I doubt very much if they would file for bankruptcy since, no doubt, Bank of America, maybe in joint with others, would step in (more, after the $ 2 Billion) before they would do so.

Also, you seem to enjoy bad news and try to find your 'rightness' with other posters.

I can't imagine that anybody here on TV wishes the world to end up into a recession as it would hurt us all, Thailand included.

You seem to be the only one though.

There's nothing wrong with reporting news. I do that as well, but nobody is absolutely sure as to which direction the financial world is going to, although I admit the news is not very promising.

But, IF we end up in a recession, Thai people would be severely hurt and that's a scenario nobody wishes for, here on TV. The majority of Thai are poor enough already.

LaoPo

I doubt anyone has even looked at their financial statements. They're pretty far off bankruptcy. $14.4 billion in equity on the balance sheet at the end of June.

The only way bankruptcy would happen is if they slip into violation of some loan covenant and then do not get a forbearance. Since they drew $11.5 billion off a credit line, I'm pretty sure they were not in violation of any loan covenants at that time. Then B of A chipped in $2 billion which gives them a cushion and they pretty likely can meet current cash needs. B of A is not stupid, they came to kick the tires before they bought in. Seriously if they go bk soon, I think Mozilo is looking at jail time for statements he's said to the contrary on tv.

But they are clearly not the same company as before. They are a slow growth company now. The regular banks are going to eat their lunch since Countrywide's price advantage on loans is gone. Laying off people is the smart thing to do.

[Martin]

"The regular banks are going to eat their lunch since Countrywide's price advantage on loans is gone."

But the regular banks had better get back to doing their banking in the old-fashioned regular way. That is, being very careful to make sure of the credit-worthiness of the borrower to whom they lend their depositors' money. And lending with a shiver down their backs, because they know they'll have to face wrathful depositors if the lending out goes wrong.

This whole mess would never have happened if the lending chain had been kept minimally short, as it used to be.

Watch now for a lot of picking over of lending practices, and law suits galore.

People will be looking to recover what their pension-scheme trustees have lost by gambling on CDOs.

But much will be unrecoverable. So there will be a lot of anger.

When people feel they have been robbed of their savings they do tend to get angry.

[VegasVic]

for the uninformed Countrywide (aka Countryslide or Countryfried) is the BIGGEST mortgage lender in its space in the US and will soon file for bankruptcy, and with the net loss of jobs reported today (loss of US 4000 as opposed to expections of 110,000 created, first net job loss since 2003), export dependent economies like Thailand with strong currencies will only feel more pain.....but hey PALM, have a lollipop with a helping of denial on me..................

Mortgage Lender Countrywide to Cut As Many As 12,000 Jobs

http://biz.yahoo.com/ap/070907/countrywide..._cuts.html?.v=4

Bingobongo, whether you're right or not, maybe it's a bit more chique if you bring news a little more to the truth and less sensational, since you don't know if Countrywide is going to file for bankruptcy or not, unless you have more inside information than we do.

I doubt very much if they would file for bankruptcy since, no doubt, Bank of America, maybe in joint with others, would step in (more, after the $ 2 Billion) before they would do so.

Also, you seem to enjoy bad news and try to find your 'rightness' with other posters.

I can't imagine that anybody here on TV wishes the world to end up into a recession as it would hurt us all, Thailand included.

You seem to be the only one though.

There's nothing wrong with reporting news. I do that as well, but nobody is absolutely sure as to which direction the financial world is going to, although I admit the news is not very promising.

But, IF we end up in a recession, Thai people would be severely hurt and that's a scenario nobody wishes for, here on TV. The majority of Thai are poor enough already.

LaoPo

Carmine covered the Countrywide situation prety well a couple of posts ago, but I had to respond to you because we seem to be agreeing an awful lot lately ( I'm not sure if that scares me or not ). Countrywide is not heading for bankruptcy, but if they were then B of A would come forward as a white knight (now that is scary!) to buy them out. The pressure on Bernanke must be incredible right about now that the jobs report was subpar (in all actuality it could have been much worse) and inflation fears are all but dead in the states, it will be one of the most interesting FOMC meetings in recent memory, I will be in the Rockies during that week but will find some Wi Fi somewhere to keep linked up!

[bingobongo]

for the uninformed Countrywide (aka Countryslide or Countryfried) is the BIGGEST mortgage lender in its space in the US and will soon file for bankruptcy, and with the net loss of jobs reported today (loss of US 4000 as opposed to expections of 110,000 created, first net job loss since 2003), export dependent economies like Thailand with strong currencies will only feel more pain.....but hey PALM, have a lollipop with a helping of denial on me..................

Mortgage Lender Countrywide to Cut As Many As 12,000 Jobs

http://biz.yahoo.com/ap/070907/countrywide..._cuts.html?.v=4

Bingobongo, whether you're right or not, maybe it's a bit more chique if you bring news a little more to the truth and less sensational, since you don't know if Countrywide is going to file for bankruptcy or not, unless you have more inside information than we do.

I doubt very much if they would file for bankruptcy since, no doubt, Bank of America, maybe in joint with others, would step in (more, after the $ 2 Billion) before they would do so.

Also, you seem to enjoy bad news and try to find your 'rightness' with other posters.

I can't imagine that anybody here on TV wishes the world to end up into a recession as it would hurt us all, Thailand included.

You seem to be the only one though.

There's nothing wrong with reporting news. I do that as well, but nobody is absolutely sure as to which direction the financial world is going to, although I admit the news is not very promising.

But, IF we end up in a recession, Thai people would be severely hurt and that's a scenario nobody wishes for, here on TV. The majority of Thai are poor enough already.

LaoPo

wow, LaoPo a little venom I see i guess you dont check YOUR facts, well I have been short countrywide stock since it was US$34 and have no intention of covering and will have no need to cover, a recession is coming and i have no problem with Thailand, the coup has been useless and unproductive, and it is not my fault that thailand is heading into the crapper (politially and economically, i just call it like i see it), i am sorry your emotions are getting in the way of seeing what is coming.....as far as negative posts, you seem to post your fair share too

the BOA investment of $2billion at $18/share with a coupon of 7.25% in Countryfried is known as death spiral financing

http://en.wikipedia.org/wiki/Death_spiral_financing

as far as countrywide is concerned, this is just a few of many tranches to be downgraded.....

Fitch Affirms $10.4MM and Downgrades $544.8MM from 2 Countrywide Second Lien Transactions

http://home.businesswire.com/portal/site/g...amp;newsLang=en

Edited September 8, 2007 by bingobongo

[LaoPo]

for the uninformed Countrywide (aka Countryslide or Countryfried) is the BIGGEST mortgage lender in its space in the US and will soon file for bankruptcy, and with the net loss of jobs reported today (loss of US 4000 as opposed to expections of 110,000 created, first net job loss since 2003), export dependent economies like Thailand with strong currencies will only feel more pain.....but hey PALM, have a lollipop with a helping of denial on me..................

Mortgage Lender Countrywide to Cut As Many As 12,000 Jobs

http://biz.yahoo.com/ap/070907/countrywide..._cuts.html?.v=4

Bingobongo, whether you're right or not, maybe it's a bit more chique if you bring news a little more to the truth and less sensational, since you don't know if Countrywide is going to file for bankruptcy or not, unless you have more inside information than we do.

I doubt very much if they would file for bankruptcy since, no doubt, Bank of America, maybe in joint with others, would step in (more, after the $ 2 Billion) before they would do so.

Also, you seem to enjoy bad news and try to find your 'rightness' with other posters.

I can't imagine that anybody here on TV wishes the world to end up into a recession as it would hurt us all, Thailand included.

You seem to be the only one though.

There's nothing wrong with reporting news. I do that as well, but nobody is absolutely sure as to which direction the financial world is going to, although I admit the news is not very promising.

But, IF we end up in a recession, Thai people would be severely hurt and that's a scenario nobody wishes for, here on TV. The majority of Thai are poor enough already.

LaoPo

wow, LaoPo a little venom I see i guess you dont check YOUR facts, well I have been short countrywide stock since it was US$34 and have no intention of covering and will have no need to cover, a recession is coming and i have no problem with Thailand, the coup has been useless and unproductive, and it is not my fault that thailand is heading into the crapper (politially and economically, i just call it like i see it), i am sorry your emotions are getting in the way of seeing what is coming.....as far as negative posts, you seem to post your fair share too

..a little venom ? Hmmm...I guess it's in the eye of the beholder and in this case: you.

Your posts are quite venomous though, towards other posters, unlike mine. Nobody here on TV has to agree with the opinion of the other but we can at least try to behave like gentlemen, can't we ?

And, as far as negative posts are concerned: I post articles from other financial sources, like Bloomberg, Wall Street Journal, Marketwatch and others. That's not my own opinion but sometimes I agree, sometimes I don't.

If these articles are negative or sombre about the world economy, so be it but I try to post positive news as well.

And, I NEVER post like you do: I am/was right...and you were wrong...have a lollipop....

think of that Sir, because I think that's very childish behaviour.

LaoPo

[lannarebirth]

for the uninformed Countrywide (aka Countryslide or Countryfried) is the BIGGEST mortgage lender in its space in the US and will soon file for bankruptcy, and with the net loss of jobs reported today (loss of US 4000 as opposed to expections of 110,000 created, first net job loss since 2003), export dependent economies like Thailand with strong currencies will only feel more pain.....but hey PALM, have a lollipop with a helping of denial on me..................

Mortgage Lender Countrywide to Cut As Many As 12,000 Jobs

http://biz.yahoo.com/ap/070907/countrywide..._cuts.html?.v=4

Bingobongo, whether you're right or not, maybe it's a bit more chique if you bring news a little more to the truth and less sensational, since you don't know if Countrywide is going to file for bankruptcy or not, unless you have more inside information than we do.

I doubt very much if they would file for bankruptcy since, no doubt, Bank of America, maybe in joint with others, would step in (more, after the $ 2 Billion) before they would do so.

Also, you seem to enjoy bad news and try to find your 'rightness' with other posters.

I can't imagine that anybody here on TV wishes the world to end up into a recession as it would hurt us all, Thailand included.

You seem to be the only one though.

There's nothing wrong with reporting news. I do that as well, but nobody is absolutely sure as to which direction the financial world is going to, although I admit the news is not very promising.

But, IF we end up in a recession, Thai people would be severely hurt and that's a scenario nobody wishes for, here on TV. The majority of Thai are poor enough already.

LaoPo

well I have been short countrywide stock since it was US$34 and have no intention of covering and will have no need to cover, a recession is coming

I had a couple of friends who used to trade with your kind of certainty. They're broke now, of course. You're probably still young enough to make it back.

[VegasVic]

for the uninformed Countrywide (aka Countryslide or Countryfried) is the BIGGEST mortgage lender in its space in the US and will soon file for bankruptcy, and with the net loss of jobs reported today (loss of US 4000 as opposed to expections of 110,000 created, first net job loss since 2003), export dependent economies like Thailand with strong currencies will only feel more pain.....but hey PALM, have a lollipop with a helping of denial on me..................

Mortgage Lender Countrywide to Cut As Many As 12,000 Jobs

http://biz.yahoo.com/ap/070907/countrywide..._cuts.html?.v=4

Bingobongo, whether you're right or not, maybe it's a bit more chique if you bring news a little more to the truth and less sensational, since you don't know if Countrywide is going to file for bankruptcy or not, unless you have more inside information than we do.

I doubt very much if they would file for bankruptcy since, no doubt, Bank of America, maybe in joint with others, would step in (more, after the $ 2 Billion) before they would do so.

Also, you seem to enjoy bad news and try to find your 'rightness' with other posters.

I can't imagine that anybody here on TV wishes the world to end up into a recession as it would hurt us all, Thailand included.

You seem to be the only one though.

There's nothing wrong with reporting news. I do that as well, but nobody is absolutely sure as to which direction the financial world is going to, although I admit the news is not very promising.

But, IF we end up in a recession, Thai people would be severely hurt and that's a scenario nobody wishes for, here on TV. The majority of Thai are poor enough already.

LaoPo

well I have been short countrywide stock since it was US$34 and have no intention of covering and will have no need to cover, a recession is coming

I had a couple of friends who used to trade with your kind of certainty. They're broke now, of course. You're probably still young enough to make it back.

Well said lannarebirth! However I must say that Bingo is correct about one thing, there will be a recession at some point in the future, my best guess is 2-3 years from now as most post WW2 economic expansions have lasted about 8 years and we are in the 5th year of the current expansion. Now the Countrywide short is a different matter altogether, should Countrywide drop back to the 15's like that fateful (and wonderful) day back in August, it might be a good idea to cover and lock in that sweet profit, because if B of A were to proceed with a takeover it would likely be in the $22-$25 range . There will be plenty of opportunities for both short and long players over the coming months, but I wouldn't take any naps as this market can turn on a dime (either way) at any given moment

[LaoPo]

A subprime message from the UK:

US loan woe 'to hit UK mortgages'

The US sub-prime loan crisis may push up mortgage rates in the UK, a former Bank of England adviser has warned.

Professor Willem Buiter, an ex-member of the Monetary Policy Committee, said UK banks were in crisis over their exposure to bad loans in the US.

He said this had made them reluctant to lend to each other, which had raised interbank lending rates.

The banks were in a state of "fear and loathing" that could increase standard mortgage rates as well, he added.

Some banks are worried that their rivals may not have revealed multi-million pound losses on sub-prime mortgages in the US.

As a result, they are currently lending to each other in the interbank money markets at an interest rate of nearly 6.9%.

That is significantly higher than the standard bank rate of 5.75%, which the Bank of England kept unchanged after its monthly MPC meeting this week.

New type of crisis

Gradually clarity will dawn, but how long it will take, it could be weeks, it could be a few months

Professor Willem Buiter

Professor Buiter told the BBC's Today programme: "The extent to which this translates into higher rates being charged to households and mortgages or hire purchase loans or higher loans to businesses in the real economy, that, I think, is an open question.

"The longer it lasts, the more likely it is that all rates from deposit rates to mortgage rates to loan rates will, ultimately, in the private sector get pulled up to that level," he added.

The current liquidity problems in the banking system have driven up interbank lending rates sharply in the past few weeks.

Professor Buiter said: "It is a new type of crisis - it is not an old fashioned banking crisis. We don't know how long it is going to last.

Higher savings rates

Evidence that these higher interbank rates are now starting to affect financial deals offered to the public has come from several lenders.

This week, five lenders - the Anglo Irish bank, Northern Rock, Heritable bank and the Derbyshire and West Bromwich building societies - have each offered new fixed-rate savings deals, but at rates up to 0.55% higher than before.

For instance, the Anglo-Irish bank is now offering to pay savers 6.9% if they lock money away for one year.

"It is unusual to see rate rises that are not triggered by increases in base rate," said Andrew Hagger of the financial information service Moneyfacts.

"However, with money markets in a volatile state on the back of the US sub-prime mortgage crisis, it is not surprising to see savings rates being increased, in an attempt to bring funds in via their front doors, rather than resorting to traditional methods."

So far, though, the higher cost of borrowing in the wholesale money markets has not filtered through to mortgages, apart from those offered to people with poor credit histories.

This may change, said Ray Boulger of the mortgage brokers John Charcol.

"If the current Bank Rate/Libor spread prevails for much longer, we may see some lenders increasing the cost of their Bank Rate tracker mortgages, and mortgages offering a discount off their standard variable rate."

http://newsvote.bbc.co.uk/2/hi/business/6983036.stm

LaoPo

[jumnien]

Many economists are optimistically predicting lower prices for new buyers of houses in the US and many parts of Europe. This is quite good news news after years of upwardly spiralling prices. Do most of you share this optimism regarding the Thai housing market?

[Carmine6]

A subprime message from the UK:

US loan woe 'to hit UK mortgages'

The US sub-prime loan crisis may push up mortgage rates in the UK, a former Bank of England adviser has warned.

Professor Willem Buiter, an ex-member of the Monetary Policy Committee, said UK banks were in crisis over their exposure to bad loans in the US.

He said this had made them reluctant to lend to each other, which had raised interbank lending rates.

The banks were in a state of "fear and loathing" that could increase standard mortgage rates as well, he added.

Some banks are worried that their rivals may not have revealed multi-million pound losses on sub-prime mortgages in the US.

As a result, they are currently lending to each other in the interbank money markets at an interest rate of nearly 6.9%.

How transparent are the bank financial statements in the UK and Europe? Do they have to disclose a lot of information in footnotes on their next quarterlies?

The US banks are going to be reporting the September quarter in October and everyone is going to be reading those footnotes. That should clear up a bit of the concern about time bombs on the balance sheets for lots of banks in the US. Lots of hedge funds are going to have to come clean by then as well.

[LaoPo]

A subprime message from the UK:

US loan woe 'to hit UK mortgages'

The US sub-prime loan crisis may push up mortgage rates in the UK, a former Bank of England adviser has warned.

Professor Willem Buiter, an ex-member of the Monetary Policy Committee, said UK banks were in crisis over their exposure to bad loans in the US.

He said this had made them reluctant to lend to each other, which had raised interbank lending rates.

The banks were in a state of "fear and loathing" that could increase standard mortgage rates as well, he added.

Some banks are worried that their rivals may not have revealed multi-million pound losses on sub-prime mortgages in the US.

As a result, they are currently lending to each other in the interbank money markets at an interest rate of nearly 6.9%.

How transparent are the bank financial statements in the UK and Europe? Do they have to disclose a lot of information in footnotes on their next quarterlies?

The US banks are going to be reporting the September quarter in October and everyone is going to be reading those footnotes. That should clear up a bit of the concern about time bombs on the balance sheets for lots of banks in the US. Lots of hedge funds are going to have to come clean by then as well.

Although I'm from Europe your question is hard to answer, but they should be transparent, like in the US.

However, although it's called 'Europe' we have to understand that the many EU countries all have different rules, despite the fact that Banks should follow the EU rules from Brussels...

There could be some surprises in the Hat of the Magician...

I think the problem is complicated. Today I watched a financial program where an expert said that Morgan Stanley guaranteed (to the buyers) the take over of ABN AMRO bank of The Netherlands for some $ 91 Billion (!); BUT it still has to be financed by them and the takeover plans are at least 4 to 5 months old.

The whole takeover could even be canceled.

I suppose we'll have to wait and see.

LaoPo

[bingobongo]

countrywide will soon be in the dustbin of history..........they have $2 TRILLION in unsold property, yes you read that correctly.......a recession is coming and it will be quite nasty.........dont forget the yen carry trade, it is unwinding and the nikkei is falling while the yen gets stronger and dollar weaker and yes thailand will feel the impact (just stating facts, nothing more and nothing less)

11,836 Homes Offered For Sale on Countrywide Financial's Website

Total Asking Price: $2,496,366,775

(As of September 5, 2007)

http://countrywide-foreclosures.blogspot.com/

Edited September 10, 2007 by bingobongo

[jumnien]

I don't see how falling home prices can hurt the economy. Rising home prices have been draining the economy for years. Now we have more money to spend, yipee!

[Steely Dan]

I don't see how falling home prices can hurt the economy. Rising home prices have been draining the economy for years. Now we have more money to spend, yipee!

I take it you are joking?! The only thing keeping economies afloat in the U.S and U.K has been what is known as mortgage equity withdrawal (MEW) which basically means that people have been borrowing yet more money using the positive equity in their homes as collateral, in other words using the said home as a giant ATM machine.

[stumonster]

Edited September 10, 2007 by stumonster

[stumonster]

Asian stocks slide on US fears

From correspondents in Tokyo | September 10, 2007

ASIAN stocks fell sharply today, dragged down by heavy losses on Wall Street after a surprise drop in US payrolls sparked fears the world's largest economy may be heading for recession, dealers said.

Investors are now pinning their hopes on a US Federal Reserve interest rate cut to shield the economy from the fallout from the US housing slump, they said.

Asian stocks suffered a heavy sell off after US and European markets were rattled by news that the US economy lost 4000 payroll jobs in August, the first decline in four years and far below market expectations. The report stoked fears of a US recession.

Japanese share prices fell 2.11 per cent in morning trade with exporter shares were particularly hard hit after the dollar slumped against the yen and other currencies on news of the US job losses.

Elsewhere, Hong Kong fell 1.7 per cent in early trade, Shanghai shed 0.46 per cent, Seoul gave up 2.6 per cent, Manila declined 1.6 per cent while Kuala Lumpur and Jakarta both slid 1.4 per cent.

http://www.theaustralian.news.com.au/story...3-12377,00.html

how is the Thai market today - I believe there is much more to come

[Carmine6]

countrywide will soon be in the dustbin of history..........they have $2 TRILLION in unsold property, yes you read that correctly.......a recession is coming and it will be quite nasty.........dont forget the yen carry trade, it is unwinding and the nikkei is falling while the yen gets stronger and dollar weaker and yes thailand will feel the impact (just stating facts, nothing more and nothing less)

11,836 Homes Offered For Sale on Countrywide Financial's Website

Total Asking Price: $2,496,366,775

(As of September 5, 2007)

http://countrywide-foreclosures.blogspot.com/

I think that might be better read as $2.5 Billion.

The key for Countrywide is how much of the loans they hold related to these listings. Their whole model was to sell a lot of the loans off and keep the servicing rights. Someone else is probably on the hook for most of these.

[wilko]

Received wisdom is that everything hinges on the US economy - most markets believe this and so react accordingly - i.e. rise or fall/buy or sell - however when reality takes over there is no guarantee that this is the case - there are several other big economies now in the world that have different and relatively independent existences.

E.G. Australia sells commodities to China and has experienced a boom in this area, but China does not just sell to US it sells to everywhere....so there's a good chance Oz will continue to see money role in from commodities.

The Euro is increasingly traded as an alternative to the dollar standard.....as a 450 million plus population if they keep buying that is a much bigger market than the US - and they buy world products not just US....

so are we seeing a recession caused by markets believing in it or by "real" causes and when it comes to the crunge will we see a world recession or merely the US economy falling behind in relation other economies?

Edited September 10, 2007 by wilko

[Martin]

In #312, 'Lao Po' reported Professor Buiter saying:

"Some banks are worried that their rivals may not have revealed multi-million pound losses on sub-prime mortgages in the US."

I am no denizen of the world of high finance, but I have felt for some months that the temptation to take a punt may not have been resisted every time. There may be a lot of trades not disimilar to Nick Leeson's to be revealed if the flat stones get turned over, as appears likely.

[Carmine6]

Received wisdom is that everything hinges on the US economy - most markets believe this and so react accordingly - i.e. rise or fall/buy or sell - however when reality takes over there is no guarantee that this is the case - there are several other big economies now in the world that have different and relatively independent existences.

E.G. Australia sells commodities to China and has experienced a boom in this area, but China does not just sell to US it sells to everywhere....so there's a good chance Oz will continue to see money role in from commodities.

The Euro is increasingly traded as an alternative to the dollar standard.....as a 450 million plus population if they keep buying that is a much bigger market than the US - and they buy world products not just US....

so are we seeing a recession caused by markets believing in it or by "real" causes and when it comes to the crunge will we see a world recession or merely the US economy falling behind in relation other economies?

Economics being like politics, there are lots of opinions. This article is pretty reasonable in it's presentation. Growth rate of 5% reduced to 3.5% with a US recession.

http://www.bloomberg.com/apps/news?pid=206...refer=exclusive

Global Growth Threatened as U.S. Contagion Spreads (Update1)

By Rich Miller

Sept. 10 (Bloomberg) -- This time, when the U.S. sneezes, the rest of the world may well catch a cold.

Global economic growth looks likely to slow markedly in the months ahead as further weakness in the U.S. infects Asia and Europe. That would represent a shift from the last 18 months, when the world economy proved immune to a U.S. slowdown and grew at an annual clip of more than 5 percent.

What's different now is the U.S. slump is starting to spread from the domestic housing market to consumers who buy imports from companies such as Toyota Motor Corp. And the sudden increase in borrowing costs that followed the collapse of the subprime-mortgage market is now showing up overseas, raising the price tag on credit worldwide.

``It will be a much bigger deal this time,'' says Raghuram Rajan, a former chief economist for the International Monetary Fund who's now a professor at the University of Chicago. ``I don't see growth falling off a cliff, but it will slow.''

If growth in the U.S. slips below 2 percent from an average of 2.3 percent in the first half, the global economy may suffer a modest slowdown to about 4.75 percent, say forecasters at Morgan Stanley & Co., Global Insight and the Economist Intelligence Unit. The contagion from a U.S. recession would hurt more, cutting global growth to 3.5 percent or less.

rest online

[wilko]

Take toyota - they manufacture most of their vehicles for the states in the States

The other markets are manufactured elsewhere - I'm aware of Bloombergs "conventional " thoughts on tghis but I think that most of these people are not capable of any lateral thinking on the matter - how great NEED the effect of a US slump be on the rest of the world?

[Carmine6]

Take toyota - they manufacture most of their vehicles for the states in the States

The other markets are manufactured elsewhere - I'm aware of Bloombergs "conventional " thoughts on this but I think that most of these people are not capable of any lateral thinking on the matter - how great NEED the effect of a US slump be on the rest of the world?

Well if someone was thinking 5% growth and now thinks 4.75% that doesn't seem so extreme an effect. Even a drop to 3.5% with a US recession is hardly alarmist. That actually implies a pretty resilient global economy. Since the US is a large share of the world's GDP (27% in $ terms in 2006), mathematically, you get almost to 3.5% if the US were completely isolated.

[lannarebirth]

for the uninformed Countrywide (aka Countryslide or Countryfried) is the BIGGEST mortgage lender in its space in the US and will soon file for bankruptcy, and with the net loss of jobs reported today (loss of US 4000 as opposed to expections of 110,000 created, first net job loss since 2003), export dependent economies like Thailand with strong currencies will only feel more pain.....but hey PALM, have a lollipop with a helping of denial on me..................

Mortgage Lender Countrywide to Cut As Many As 12,000 Jobs

http://biz.yahoo.com/ap/070907/countrywide..._cuts.html?.v=4

Bingobongo, whether you're right or not, maybe it's a bit more chique if you bring news a little more to the truth and less sensational, since you don't know if Countrywide is going to file for bankruptcy or not, unless you have more inside information than we do.

I doubt very much if they would file for bankruptcy since, no doubt, Bank of America, maybe in joint with others, would step in (more, after the $ 2 Billion) before they would do so.

Also, you seem to enjoy bad news and try to find your 'rightness' with other posters.

I can't imagine that anybody here on TV wishes the world to end up into a recession as it would hurt us all, Thailand included.

You seem to be the only one though.

There's nothing wrong with reporting news. I do that as well, but nobody is absolutely sure as to which direction the financial world is going to, although I admit the news is not very promising.

But, IF we end up in a recession, Thai people would be severely hurt and that's a scenario nobody wishes for, here on TV. The majority of Thai are poor enough already.

LaoPo

well I have been short countrywide stock since it was US$34 and have no intention of covering and will have no need to cover, a recession is coming

I had a couple of friends who used to trade with your kind of certainty. They're broke now, of course. You're probably still young enough to make it back.

Well said lannarebirth! However I must say that Bingo is correct about one thing, there will be a recession at some point in the future, my best guess is 2-3 years from now as most post WW2 economic expansions have lasted about 8 years and we are in the 5th year of the current expansion. Now the Countrywide short is a different matter altogether, should Countrywide drop back to the 15's like that fateful (and wonderful) day back in August, it might be a good idea to cover and lock in that sweet profit, because if B of A were to proceed with a takeover it would likely be in the $22-$25 range . There will be plenty of opportunities for both short and long players over the coming months, but I wouldn't take any naps as this market can turn on a dime (either way) at any given moment

Hi Vic,

Usually what happens is, you get one of these 4 -4.5 year cycle lows based on some crisis or other and then the market bottoms and takes off again. Usually it will advance with much weaker breadth, with the bulk of money going into fewer and fewer issues. This is what happened post '98 cycle bottom. Breadth actually topped in '98, but the market kept advancing till 2000.

[Martin]

The above analyses are all pretty OK, based on what the Futures Studies people call "The Established Trend".

It is only when we get, relatively rarely, what they call "An Emerging Issue" that we see a big lurch, and 'all bets are off'.

Greenspan, a couple of days ago, pointed to the established trend of confidence among the credit swappers having been overtaken by the emergence of fear.

We simply do not know whether that will stay just among bankers etc.

There will be some recession, as there are quite a number of people whose jobs were in, or related to, house construction being laid off.

Will their neighbours just shrug and carry on spending blithly?, or will they fear for their own jobs and decide to rein in on all unnecessary spending?

GDP growth could well go severely negative in that case.

The reducing of interest rates after 9/11 worked, as people borrowed and spent.

The question is whether that will happen again, but the answer has to be: "Hopefully, it will; but really we just don't know".

Edited September 10, 2007 by Martin

[VegasVic]

for the uninformed Countrywide (aka Countryslide or Countryfried) is the BIGGEST mortgage lender in its space in the US and will soon file for bankruptcy, and with the net loss of jobs reported today (loss of US 4000 as opposed to expections of 110,000 created, first net job loss since 2003), export dependent economies like Thailand with strong currencies will only feel more pain.....but hey PALM, have a lollipop with a helping of denial on me..................

Mortgage Lender Countrywide to Cut As Many As 12,000 Jobs

http://biz.yahoo.com/ap/070907/countrywide..._cuts.html?.v=4

Bingobongo, whether you're right or not, maybe it's a bit more chique if you bring news a little more to the truth and less sensational, since you don't know if Countrywide is going to file for bankruptcy or not, unless you have more inside information than we do.

I doubt very much if they would file for bankruptcy since, no doubt, Bank of America, maybe in joint with others, would step in (more, after the $ 2 Billion) before they would do so.

Also, you seem to enjoy bad news and try to find your 'rightness' with other posters.

I can't imagine that anybody here on TV wishes the world to end up into a recession as it would hurt us all, Thailand included.

You seem to be the only one though.

There's nothing wrong with reporting news. I do that as well, but nobody is absolutely sure as to which direction the financial world is going to, although I admit the news is not very promising.

But, IF we end up in a recession, Thai people would be severely hurt and that's a scenario nobody wishes for, here on TV. The majority of Thai are poor enough already.

LaoPo

well I have been short countrywide stock since it was US$34 and have no intention of covering and will have no need to cover, a recession is coming

I had a couple of friends who used to trade with your kind of certainty. They're broke now, of course. You're probably still young enough to make it back.

Well said lannarebirth! However I must say that Bingo is correct about one thing, there will be a recession at some point in the future, my best guess is 2-3 years from now as most post WW2 economic expansions have lasted about 8 years and we are in the 5th year of the current expansion. Now the Countrywide short is a different matter altogether, should Countrywide drop back to the 15's like that fateful (and wonderful) day back in August, it might be a good idea to cover and lock in that sweet profit, because if B of A were to proceed with a takeover it would likely be in the $22-$25 range . There will be plenty of opportunities for both short and long players over the coming months, but I wouldn't take any naps as this market can turn on a dime (either way) at any given moment

Hi Vic,

Usually what happens is, you get one of these 4 -4.5 year cycle lows based on some crisis or other and then the market bottoms and takes off again. Usually it will advance with much weaker breadth, with the bulk of money going into fewer and fewer issues. This is what happened post '98 cycle bottom. Breadth actually topped in '98, but the market kept advancing till 2000.

Precisely my point! This current situation will bleed some excesses out of the system (irresponsible hedge funds, lenders and real estate flippers mostly) and 6 months from now the current economic expansion will continue on its path. A recession may come in the latter half of 2009 or 2010, but it won't happen this winter. This next recession, when it does occur could be a biggy. The Shanghai exchange continues its unsustainable move straight up and when this market comes crashing down (many say it won't be until after next summers Olympics) and coupled with that if the U.S. electorate does indeed see fit to elect the Democrats to the White house and Congress then you will see some very protectionist anti China trade policy (which is the last thing that China or the U.S. needs) that potentially could lead to a devestating recession by late 2009! I think one of the biggest misconceptions by many outside the U.S. is that this whole subprime meltdown has had a large effect on the average U.S. citizen, when in fact just the opposite is true. This subprime meltdown has forced some layoffs in the hedge fund industry , the subprime (opportunisitc) lending industry, and the residential home builders (mostly illegal immigrants), the average U.S. citizen could actually care less about all the negative rhetoric, as inflation is basically non existent in the U.S. and unemployment remains at 4.6% (despite all the countrywide and home builder layoffs!). Most of the folks who had their house go into foreclosure were renters before the boom and they just simply went back to renting. I also find it humorous that posters like Wilko still fail to realize the size and scope of the U.S. economy and its effect on the world, especially when he makes a statement like "Australia sells commodities to China and has experienced a boom inthis area, but China does not just sell to the U.S. it sells everywhere". Wilko there is nothing wrong with being a partisan aussie, but when you make a completely ignorant statment like this one(and some of your others) it shows everyone that you don't have a clue Why don't you try and actually look at the statistics on Chinese exports and look at the percentage going to consumers in the U.S., if the U.S. put a ban on Chinese exports tomorrow then many of those aussie commodity exporters would go out of business and the ones that remained in business would have their profit margins drastically cut because commodities would take a nosedive. Now go back and do your homework Mr. Wilko and you will find out why Bloomberg says "when the U.S. sneezes the rest of the world catches a cold", you may not like what you find but at least you will be informed

[wilko]

for the uninformed Countrywide (aka Countryslide or Countryfried) is the BIGGEST mortgage lender in its space in the US and will soon file for bankruptcy, and with the net loss of jobs reported today (loss of US 4000 as opposed to expections of 110,000 created, first net job loss since 2003), export dependent economies like Thailand with strong currencies will only feel more pain.....but hey PALM, have a lollipop with a helping of denial on me..................

Mortgage Lender Countrywide to Cut As Many As 12,000 Jobs

http://biz.yahoo.com/ap/070907/countrywide..._cuts.html?.v=4

Bingobongo, whether you're right or not, maybe it's a bit more chique if you bring news a little more to the truth and less sensational, since you don't know if Countrywide is going to file for bankruptcy or not, unless you have more inside information than we do.

I doubt very much if they would file for bankruptcy since, no doubt, Bank of America, maybe in joint with others, would step in (more, after the $ 2 Billion) before they would do so.

Also, you seem to enjoy bad news and try to find your 'rightness' with other posters.

I can't imagine that anybody here on TV wishes the world to end up into a recession as it would hurt us all, Thailand included.

You seem to be the only one though.

There's nothing wrong with reporting news. I do that as well, but nobody is absolutely sure as to which direction the financial world is going to, although I admit the news is not very promising.

But, IF we end up in a recession, Thai people would be severely hurt and that's a scenario nobody wishes for, here on TV. The majority of Thai are poor enough already.

LaoPo

well I have been short countrywide stock since it was US$34 and have no intention of covering and will have no need to cover, a recession is coming

I had a couple of friends who used to trade with your kind of certainty. They're broke now, of course. You're probably still young enough to make it back.

Well said lannarebirth! However I must say that Bingo is correct about one thing, there will be a recession at some point in the future, my best guess is 2-3 years from now as most post WW2 economic expansions have lasted about 8 years and we are in the 5th year of the current expansion. Now the Countrywide short is a different matter altogether, should Countrywide drop back to the 15's like that fateful (and wonderful) day back in August, it might be a good idea to cover and lock in that sweet profit, because if B of A were to proceed with a takeover it would likely be in the $22-$25 range . There will be plenty of opportunities for both short and long players over the coming months, but I wouldn't take any naps as this market can turn on a dime (either way) at any given moment

Hi Vic,

Usually what happens is, you get one of these 4 -4.5 year cycle lows based on some crisis or other and then the market bottoms and takes off again. Usually it will advance with much weaker breadth, with the bulk of money going into fewer and fewer issues. This is what happened post '98 cycle bottom. Breadth actually topped in '98, but the market kept advancing till 2000.

Precisely my point! This current situation will bleed some excesses out of the system (irresponsible hedge funds, lenders and real estate flippers mostly) and 6 months from now the current economic expansion will continue on its path. A recession may come in the latter half of 2009 or 2010, but it won't happen this winter. This next recession, when it does occur could be a biggy. The Shanghai exchange continues its unsustainable move straight up and when this market comes crashing down (many say it won't be until after next summers Olympics) and coupled with that if the U.S. electorate does indeed see fit to elect the Democrats to the White house and Congress then you will see some very protectionist anti China trade policy (which is the last thing that China or the U.S. needs) that potentially could lead to a devestating recession by late 2009! I think one of the biggest misconceptions by many outside the U.S. is that this whole subprime meltdown has had a large effect on the average U.S. citizen, when in fact just the opposite is true. This subprime meltdown has forced some layoffs in the hedge fund industry , the subprime (opportunisitc) lending industry, and the residential home builders (mostly illegal immigrants), the average U.S. citizen could actually care less about all the negative rhetoric, as inflation is basically non existent in the U.S. and unemployment remains at 4.6% (despite all the countrywide and home builder layoffs!). Most of the folks who had their house go into foreclosure were renters before the boom and they just simply went back to renting. I also find it humorous that posters like Wilko still fail to realize the size and scope of the U.S. economy and its effect on the world, especially when he makes a statement like "Australia sells commodities to China and has experienced a boom inthis area, but China does not just sell to the U.S. it sells everywhere". Wilko there is nothing wrong with being a partisan aussie, but when you make a completely ignorant statment like this one(and some of your others) it shows everyone that you don't have a clue Why don't you try and actually look at the statistics on Chinese exports and look at the percentage going to consumers in the U.S., if the U.S. put a ban on Chinese exports tomorrow then many of those aussie commodity exporters would go out of business and the ones that remained in business would have their profit margins drastically cut because commodities would take a nosedive. Now go back and do your homework Mr. Wilko and you will find out why Bloomberg says "when the U.S. sneezes the rest of the world catches a cold", you may not like what you find but at least you will be informed

why whats wrong with MY homework - not Bloombergs!!??